Religare Institutional Research has maintained 'Buy' on GAIL India with target price of Rs 510 in its report.

Commenting on the investment rationale, the stock broker said, GAIL's Q1 PAT at Rs 6.2 billion came in below estimates on one-time provisioning of Rs 2.4 billion towards p/l tariff and Rs 1.9 billion towards gas trading (reversible in Q2).

A planned shutdown of 7 days in April and an unplanned outage of 2 weeks over May-June 14 led to lower petchem production/sales of 98/87ktpa. Q1 realisations however increased to Rs 114/kg (Q4: Rs 110/kg). Petchem sales are expected to revive Q2 onwards.

NG trading EBIT at Rs 355 million was hit by softer marketing margins as LNG prices declined in Q1 and one-time adjustments of Rs 1.9 billion due to under-recovery on imported RLNG value (which would be reversed in Q2 and thus help reinstate NG trading margins).

While Q1 was below estimates, GAIL's long-term fundamentals are intact, as transmission volumes have likely bottomed in FY14 and would improve over FY15-FY17, petchem earnings would grow with capacity expansion in PATA (Q2-Q3FY15) and GAIL's p/L tariffs would improve due to recalculation (given current underutilization)."

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.